DTI chief woos foreign auto assemblers

By Catherine N. Pillas, BusinessMirror

MANILA -- Four foreign auto assemblers have expressed interest in locating to the Philippines and could bring in substantial investments, according to Trade Secretary Gregory L. Domingo, as he extended his invitation for more such firms to do business here.

“What we want is to invite more significant manufacturing operations than what currently exists, and scale higher,” Domingo said in a chance interview with reporters at the sidelines of the Philippine Retailers Association’s annual Awards Night at the Crowne Plaza Hotel. He declined to identify the four firms.

According to the trade chief, the minimum investments for assembly facilities that could be brought in by auto assemblers would be $100 million, as these firms would bring in their supply chains, thus strengthening other manufacturers as well.

“We are aspiring to have them do large body parts here, plastic-molded parts na malalaki, instrument panels, body stamping,” added Domingo, citing the type of large-scale activity that the trade department is eyeing.

Moreover, he said the improving levels of gross domestic product (GDP) per capita and the growing domestic market would bode well for these firms planning to invest in the Philippines.

“The biggest incentive is having a big domestic market as a base,” Domingo said.

The automotive industry’s booming sales, which the trade chief estimates to be above 20 percent this year, play a role in attracting these firms as well.

He said the high cost of producing automotives is due to the limited volume. But he added that that the cost could be lowered if the volume is filled in by the auto firms’ assembly plants, so the process needs to be initiated.

According to data from the Philippine Automotive Competitiveness Council Inc., the domestic auto manufacturing industry is losing ground in the domestic market as the ratio between locally assembled units (CKD units) and imported CBUs (completely built-up units) has been rapidly turning in favor of CBUs over the past decade.

In 2002 the ratio stood at 92:8 between CKD and CBUs, respectively, but has tipped to 39:61 in 2012, and an estimated ratio of 34:66, in favor of CBUs, was estimated early last year.